Employment Law Report
NLRB Rejects McDonald’s Procedural Motions
Earlier this month, the National Labor Relations Board issued two decisions rejecting procedural motions filed by McDonald’s, USA in the pending unfair labor practice cases filed against it and certain McDonald’s franchisees. As background, in December 2014 the NLRB’s General Counsel issued 13 complaints involving 78 unfair labor practice charges filed against McDonald’s and its franchisees in 13 NLRB regional offices across the country. The complaints allege various kinds of unfair labor practices against employees seeking to organize unions at McDonald’s restaurants (e.g., discrimination, discharges, surveillance, interrogation, threats). Significantly, as has been well publicized, in addition to the substantive unfair labor practice allegations, the General Counsel is alleging that McDonald’s and its franchisees are a single employer and that, therefore, McDonald’s is jointly liable for any unfair labor practices committed by its franchisees.
Complaints from six NLRB regions (New York, Philadelphia, Chicago, Indianapolis, San Francisco and Los Angeles) were consolidated for a trial that started in March 2015 in New York, then was scheduled to move to Chicago and finish in Los Angeles. An NLRB Administrative Law Judge was assigned to preside over the case and hear the evidence. In March 2015, over McDonald’s objection, the judge issued a pre-trial order ruling that the joint employer issue would be litigated before the substantive unfair labor practice issues. The judge also rejected McDonald’s motion to sever the consolidated cases and have them tried separately.
Normally such rulings by NLRB judges are not immediately appealable to the NLRB, but McDonald’s and its New York franchisees sought special permission to appeal, and the NLRB granted their request. The matter was assigned to a three-member panel consisting of NLRB Chairman Pearce and Members Hirozawa and Miscimarra. In a split decision on both issues, the panel majority consisting of Chairman Pearce and Member Hirozawa (both lawyers who previously represented unions and employees) rejected the appeal on the merits. On the issue of the order of proof, the panel majority found that the Respondents (McDonald’s and the franchisees) failed to establish that the judge abused her discretion to regulate the order of proof at trial. In dissent, Member Miscimarra (a lawyer who previously represented management) argued that this order of proof required the parties to litigate the issue of liability before the presentation of evidence regarding whether the Respondents committed any of the alleged unfair labor practices. Thus, in his view, the judge afforded deference to the General Counsel’s theory of the case and increased costs while diminishing the role and participation of the franchisees at trial.
As for the issue of whether the six cases should be consolidated or severed, the panel majority found that the Respondents failed to meet the “heavy burden” of establishing that the judge abused her discretion by denying their motions. In addition, the panel majority agreed with the judge that the General Counsel had not abused her discretion by consolidating the complaints. The panel majority found, contrary to their dissenting colleague, that the approach urged by the Respondents would require 22 hearings by administrative law judges involving primarily the same evidence pertaining to the issue of whether McDonald’s and its franchisees are joint employers, resulting in an equal number of judges’ decisions and possible determinations by the Board. Although it found speculative whether the judge’s or the Respondents’ approach would ultimately prove more efficient, the panel majority concluded that the General Counsel’s consolidation was not arbitrary and did not exceed his authority. Member Miscimarra, dissenting, found unprecedented the consolidation of 61 unfair labor practice charges, filed in six different Board Regions, regarding alleged violations involving particular employees at different locations operated by several, distinct franchisees. Member Miscimarra concluded that the consolidation would increase the costs and delays for all parties, and that it already had caused the judge and the Board to adopt irregular case management procedures that might yield either actual or the appearance of unfairness, and potentially require the cases to be re-litigated in the future.
McDonald’s may try to appeal this ruling to the U.S. Court of Appeals, but that would be difficult because under Section 10(f) of the National Labor Relations Act, the court of appeals only has jurisdiction to review final orders of the NLRB, and this is not a final order, since the case has not even been tried yet. The more likely outcome will be that the case will go back to the judge for trial. Stay tuned.